The main objective of every business is to make profit. Companies continually explore methods of increasing their bottom line and sometimes, that may mean acquiring companies in the same industry for several operational or economic reasons which ultimately would lead to increased revenue.

Recently, the fintech space in Nigeria was given a significant boost following the acquisition of Paystack by international payments company, Stripe in a record-breaking deal. For companies seeking to make similar acquisitions in Nigeria, there are certain legal and regulatory requirements to be considered when acquiring a business.

1. General Applicable Legislations

Acquisitions in Nigeria are governed by key legislations. These are the Federal Competition and Consumer Protection Act (FCCPA) 2019 and the Companies and Allied Matters Act 2020 (CAMA).

Prior to the passage of the FCCPA in 2019, the Investment and Securities Act (ISA) 2007 and the Securities and Exchange Commission Rules and Regulations 2013 (SEC Rules) governed mergers and acquisitions in Nigeria. By the provisions of the FCCPA however, the Federal Competition and Consumer Protection Commission ("the Commission") took over the regulation of mergers and acquisitions from SEC.

Under the FCCPA, all acquisitions are required to be approved by the Commission. However, acquisitions classified as "small mergers" are not required to be notified to the Commission except otherwise requested by the Commission. Small mergers are classified as such, where the combined assets and turnovers of the acquiring and target company fall below NGN1 billion.

It should be noted that acquisitions of shares qualify as "mergers" and fall under the regulation of the Commission whenever they result in an acquisition of controlling stake in the acquired company.

2. Sector-Specific Legislations

There are other legislations that are specific to individual industries. Companies operating in these sectors are required to follow the rules of acquisitions specified in the legislations or required by regulators. These laws and regulatory requirements operate in addition to the primary legislations stated above.

In the banking sector for example, the Banks and Other Financial Institutions Act and the Central Bank of Nigeria's Guidelines regulate acquisitions in the banking sector. Also, the Central Bank of Nigeria ("CBN") generally requires other financial institutions which the CBN regulates to seek its consent prior to a change in the ownership structure of such institutions.

3. Taxes

Acquisition transactions should not take place without the prior direction from the Federal Inland Revenue Service (FIRS) in connection with taxes/duties which may be applicable to such transaction. It is important that both the acquirer and target companies settle all outstanding tax obligations to the FIRS. Where the acquisition involves the sale of assets, capital gains tax will be payable. In situations where an acquisition results in the creation of more shares, stamp duties tax will be payable on the new shares.


Acquisition transactions are major deals which require several legal considerations. Acquiring companies should ensure that, in addition to the economic factors already considered, legal and regulatory requirements should be met when closing an acquisition deal to prevent regulatory sanctions and legal liability.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.